AN ALTERNATIVE ECONOMIC MODEL

ABSTRACT: Worker cooperatives, where a business is owned and run by its workers, are gaining attention as a way to provide jobs and better pay for low wage workers. New York City recently established a Worker Cooperative Business Development Initiative and provided $1.2 million in funding for it.

According to the US Federation of Worker Cooperatives (http://www.usworker.coop/), there are more than 300 co-ops in the US today. One of the largest is the 2,300 member Cooperative Home Care Associates in the Bronx. Internationally, perhaps the best known worker co-op is the Mondragon Cooperative Corporation in Spain, which employs over 80,000 people in 289 companies, 110 of which are co-ops.

In New York City, in the aftermath of the 2008 Great Recession, the Federation of Protestant Welfare Agencies (FPWA), a 90-year old anti-poverty association of 200 religious groups and community organizations, sought new ways to address high unemployment and poverty. FPWA studied co-ops around the world and concluded that to get a strong co-op economy going a public investment was needed. It used its contacts, clout, and political savvy to lobby city government to provide seed money. When Bill de Blasio became Mayor in 2014, he proclaimed June 21 “New York Worker Cooperative Day.” On June 26, the City Council voted $1.2 million for the Worker Cooperative Business Development Initiative.

This seed funding is needed because worker co-ops are more difficult to start than regular businesses. However, once established, they tend to be very sustainable. New York City hopes worker co-ops will reduce unemployment, poverty, and inequality while promoting democracy in the workplace.

FULL POST: You don’t hear much about worker cooperatives as an alternative economic model in the US. However, these co-ops, where a business is owned and run by its workers, are gaining attention as a way for social service agencies and city governments to provide jobs and better pay for low wage workers.

New York City recently established a Worker Cooperative Business Development Initiative and provided $1.2 million in funding for it. It will establish 28 new worker cooperatives, create 234 jobs, and provide education, training, and support to 20 existing co-ops. [1] (See more information on this initiative below.)

The history of worker cooperatives in the US goes back to the Knights of Labor in the late 1800s. At that time, roughly 200 co-ops existed in industries from clothing mills to mines, and from foundries to manufacturing. By the turn of the century, they were crushed by big business’s drive to eliminate competition. The for-profit businesses accomplished this by refusing to ship the co-ops’ goods, sell them materials or machinery, or give them loans.

African Americans, particularly farmers, needing an alternative to the corporate economy that largely excluded them, had established well over 100 co-ops by early in the 20th century. These co-ops faced numerous obstacles and opponents, however efforts in the Black community to support an alternative economy persisted throughout much of the 20th century.

The federal government fostered co-ops as part of the New Deal after the Great Depression, but these faded away after World War II. Worker cooperatives enjoyed a resurgence in the rebellion against the establishment of the 1960s and 70s. Some of the co-ops founded then survive today.

According to the US Federation of Worker Cooperatives (http://www.usworker.coop/), there are more than 300 co-ops in the US today, ranging from taxi, engineering, architecture, and computer businesses to ones in cleaning and construction. They are spread across the country, with 56 in California, 40 in New York, and 35 in Massachusetts.

One of the largest worker co-ops is the 2,300 member Cooperative Home Care Associates in the Bronx. One of that received quite a bit of attention not too long ago is the Chicago-based New Era Windows Cooperative. It was formed after laid off workers occupied the factory that Republic Windows and Doors announced it was closing in 2008 when the company tried to move the factory’s work to a different company with a non-unionized workforce.

Internationally, perhaps the best known worker co-op is the Mondragon Cooperative Corporation in Spain. Started in 1956, today it employs over 80,000 people in 289 companies, 110 of which are co-ops. During the Great Recession of 2008, it fared better than most companies and instead of laying off workers, it engaged in creative solutions and re-training to keep all its workers employed.

In New York City, in the aftermath of the 2008 Great Recession, the Federation of Protestant Welfare Agencies (FPWA), a 90-year old anti-poverty association of 200 religious groups and community organizations, sought new ways to address high unemployment and poverty. It contacted the Center for Family Life, which had incubated 4 successful worker cooperatives since 2006. One of those co-ops, Si Se Puede (Yes, we can), a home and office cleaning company with 64 member-owners, has tripled wages for its mostly female, minority members while growing to a $1 million a year business in 8 years.

FPWA studied co-ops around the world and concluded that to get a strong co-op economy going a public investment was needed. It used its contacts, clout, and political savvy to lobby city government to provide seed money. It formed the Coalition for Worker Cooperatives for New York City, produced a policy report “Worker Cooperatives for New York City: A Vision for Addressing Income Inequality,” and organized a conference targeting city officials. The Coalition worked to gain the support of city councilors and organized a Co-op Advocacy Day held on the steps of City Hall.

When Bill de Blasio became Mayor in 2014, he proclaimed June 21 “New York Worker Cooperative Day.” On that day, the first annual NYC worker co-op conference was held, titled “Economic democracy and economic justice: A tale of a new city.” On June 26, the City Council voted $1.2 million for the Worker Cooperative Business Development Initiative.

This seed funding is needed because worker co-ops are more difficult to start than regular businesses. Typically, their members have little business experience or training and tend to be low-income, immigrants and minorities, and often women. However, once established, they tend to be very sustainable. The workers tend to have lower turnover, be more productive, and report greater satisfaction with their jobs. In Canada, where there is a sizable cooperative business sector, worker co-ops have lifespans four times longer than conventional businesses.

New York City’s government has taken an innovative step to promote economic development targeting the people who need it the most. It hopes worker co-ops will reduce unemployment, poverty, and inequality while promoting democracy in the workplace. Hopefully, they’ll be successful and other cities and states in the US will follow suit in building worker cooperatives as an alternative economic model to corporate capitalism.

[1]       Ifateyo, A.N., Sept. 2014, “A co-op state of mind,” In These Times (This post is largely a summary of this article.)

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